VDMA warns German machinery R&D increasingly shifting overseas

VDMA warns German machinery R&D increasingly shifting overseas | European Rubber Journal MENU News Focus Featured Content Technical Papers FTR Awards Featured Articles Rubber & tire machinery makers record solid growth performance 17 June 2025 Tire & rubber machinery sector bounces back 09 June 2024 Digital Edition Brainiac Login to your account Login Forgot your password? Don’t have an account? Register Forgot password? Register Home News VDMA warns German machinery… Back to News VDMA warns German machinery R&D increasingly shifting overseas 16 Sep 2026 Share: Industry association warns China, India gaining importance as research locations Frankfurt, Germany – German mechanical and plant engineering companies are increasingly expanding research and development activities overseas, according to a recent VDMA survey. More than 40% of companies surveyed already conduct R&D outside Germany, with the figure rising to nine in 10 among companies employing more than 1,000 people. Of companies with international R&D activities, 69% said they were expanding research outside Germany, VDMA reported 8 Sept. Furthermore, 40% expect the overseas share of their R&D to increase by around 10 percentage points over the next five years with just under 40% anticipating an “even stronger growth” outside the country. “This is a clear warning sign for Germany as an industrial hub,” said Hartmut Rauen, deputy executive director of VDMA. The association’s survey covered just over 400 member companies in Germany’s mechanical and plant engineering sector. Despite the shift overseas, companies continue to invest in R&D at their German operations, with 39% expecting domestic expenditure to increase in 2026. Where R&D spending is declining, companies primarily cited falling sales and high costs associated with operating in Germany. “Innovation does not take place in a vacuum,” Rauen said. “A tight profit situation and structural locational disadvantages limit the financial scope for future investments as well.” According to VDMA, overseas research is concentrated particularly at corporate locations in China, India and the US. China and India are expected to gain further importance as R&D locations, while Germany and other European locations are “at best, stagnating.” “If this trend continues unchecked, it will soon jeopardise the innovative core of our industry,” Rauen warned. The survey also showed a shift in perceptions of international innovation competitiveness. Some 71% of respondents, VDMA said, “identify China as their strongest competitor in terms of innovation, whilst 65% cite Germany.” Until 2024, Germany had ranked ahead of China. “Here, too, we can see just how intense the pressure from China has become,” said Rauen. China and the US were also rated significantly above Germany in the use of artificial intelligence within the innovation process. However, basic research remains largely concentrated in Germany, while R&D operations in China, India and the US focus more strongly on market- and production-related activities. “Particularly when it comes to sensitive knowledge that determines future competitiveness, companies deliberately keep their basic research closer to their home base,” Rauen said. VDMA also called for continued government support for industrial research, pointing to Germany’s research allowance as its sector’s most widely used public R&D funding instrument. Some 48% of surveyed companies said they had used the allowance over the past three years, while a quarter of companies are increasing R&D expenditure, due in part to funding opportunities. “This shows that tailored, technology-neutral and unbureaucratic funding works,” Rauen said. VDMA meanwhile criticised a planned reduction in funding for Germany’s Industrial Collective Research programme in the 2027 federal budget. Rauen described the proposed cut as a “disastrous signal”, saying companies that “still rely heavily on Germany as an R&D hub” would be particularly affected. This article is only available to subscribers – subscribe today Subscribe for unlimited access. A subscription to European Rubber Journal includes: Every issue of European Rubber Journal (6 issues) including Special Reports & Maps. Unlimited access to ERJ articles online Daily email newsletter – the latest news direct to your inbox Access to the ERJ online archive Subscribe > Already a subscriber? 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